The Senate Health-Care Bill Would Be a Giant Step Backward

The Republican bill could return the country to a system where the old, the sick, and the working poor struggle to find coverage—or go without.

llustration by Oliver Munday / Photograph by Chip Somodevilla / Getty

The draft of the Senate G.O.P. health-care bill that Mitch McConnell, the Majority Leader, released on Thursday is, in
one way, an improvement on the previous version of the bill. The latest
draft dropped a proposal to repeal two tax increases on very high
earners, which were part of the Affordable Care Act. The revenue from
those tax increases was used to help fund some of the A.C.A.’s most
progressive features, including the expansion of Medicaid and the
subsidies offered to families of modest means for the purchase of
private insurance plans.

But the merits of the revised Senate bill stop there. Enacting it into
law would be a disaster. The old and the sick would be forced to pay far
higher premiums; deductibles would go up for almost everyone in the
individual market; and many millions of Americans, many of them poor,
would lose their health-care coverage entirely.

Before delving into the details, it is worth restating what is at stake
here: the principle that society is made up of people with mutual
obligations, including the duty to try to protect everyone from what
Franklin Roosevelt called the “hazards and vicissitudes of life,” such
as old age, unemployment, and sickness.

To deal with aging and joblessness, F.D.R. introduced Social Security
and expanded unemployment insurance. Originally, he intended to include
publicly funded health care as part of Social Security, but opposition
from the medical profession persuaded him to leave it out. In the
decades since F.D.R.’s fateful decision, it has become clear that
private insurance works tolerably well for people who hold well-paid,
steady jobs at large companies—especially when the tax authorities don’t
treat employer-provided health insurance as taxable income. But for
everybody else—the elderly, people with low-wage jobs that don’t offer
benefits, the self-employed and employees of small companies, people who
are employed intermittently or who are out of work—private insurance is
costly, complicated, and often hard to obtain.

During the nineteen-sixties, the Lyndon Johnson Administration
introduced Medicare, for senior citizens, and Medicaid, for
poverty-stricken families with children. But people outside those
categories were left to the mercies of the insurance market, the
shortcomings of which eventually became glaringly obvious. By 2013,
close to one in five adult Americans didn’t have any health-care
coverage. The A.C.A. took a two-pronged approach to fixing that
situation.

The A.C.A. raised the income thresholds for eligibility to Medicaid,
allowing individuals and families with incomes just above the poverty
line to qualify for the program. This policy worked wonders. Since going
into effect, at the start of 2014, it has enabled about fourteen million
Americans, most of them from working families, to obtain health-care
coverage.

The A.C.A. also tried to make private insurance more affordable and
accessible. One way it did this was by offering hefty federal subsidies
to low-to-middle-income households. But it also issued a series of
directives. To improve the quality of insurers’ risk pools, it forced
everybody, including the young and the healthy, to purchase coverage. At the
same time, it obliged insurance companies to offer standardized policies
that provided a comprehensive set of benefits, banned them from turning
away people with preëxisting conditions, and placed strict limits on how
much more they could charge older people.

All of this was an effort to recognize the principle of mutual
obligation while preserving a private insurance system. The revised
Senate bill would largely dismantle this effort, reversing both the
expansion of Medicaid and many of the reforms that were designed to make
private insurance work more equitably. If it passed, the
Republican reform would eventually return the country to a system a lot
like the one in place before the A.C.A., when older people, sick people, and the working poor struggled to find coverage—or went without.

Despite objections from some Republican senators from states that have
expanded Medicaid under the A.C.A., the revised bill leaves in place
seven hundred billion dollars of cuts to the program, as well as the idea of
converting it to a block-grant program. The consequences of these
changes would be dramatic. By 2025, according to the Congressional
Budget Office, about fifteen million fewer people would be covered by
Medicaid and its sibling, the Children’s Health Insurance Program.

On the private-insurance side, the authors of the revised Senate bill
took some of the money saved from dropping the tax cuts for the rich and
allotted it to compensating insurers for covering high-risk individuals.
But the revised bill also includes a new amendment championed by
Senators Ted Cruz and Mike Lee: as long as an insurer offered a
standardized, A.C.A.-compliant policy on a government-run exchange, it
would be allowed to sell unregulated, catastrophic-care plans outside
the exchanges.

To people unschooled in the economics of insurance markets, this
proposal may look innocent enough, but it is a torpedo aimed at the
exchanges, which are an essential part of Obamacare. For people in their
twenties and thirties, the premiums on the unregulated plans, which
would come with very large deductibles, would be fairly low. But the
insurers would be allowed to charge less desirable customers—older and
less-healthy individuals, including ones with preëxisting
conditions—much higher prices for these plans, or even deny them
coverage. As most of these people continued to buy comprehensive plans,
while more and more young people chose the cheaper options available
outside the exchanges, the risk pools in the Obamacare-type markets
would deteriorate sharply.

This would have devastating consequences. Insurers would hike their
premiums, and many people wouldn’t be able to afford them, including
people with serious illnesses. A cycle of rising prices and falling
enrollments could eventually cause the exchanges to collapse. The only
way to prevent this from happening would be for Congress to offer bigger
and bigger subsidies to the buyers of comprehensive plans and the
insurers who offer them.

Whether this is Cruz and Lee’s intention is irrelevant. It is how
private health care works when it isn’t regulated and the principle of mutual obligation is ignored, or relegated to a secondary consideration. “Choice always sounds so good, like with the Cruz amendment,” Larry Levitt, a senior vice-president at the Kaiser
Family Foundation, explained on Twitter. “But in insurance, it's generally a recipe for instability and discrimination.” The United States lived for decades with a
health-care system that discriminated against the old, the sick, and
those too poor to afford coverage. Will Republican ideologues be allowed
to plunge the country back into this dark past?